In concept, Twisted Metal is a demolition derby which permits the usage of ballistic projectiles. Players choose a vehicle and an arena, or a series of arenas in the story mode to engage in battle with opposing drivers. A variety of weapons, ranging from missiles to land mines, are obtainable by pick-ups scattered throughout the stage; as well as "repair stations" that regenerate the player's health. The objective of the game is to defeat all of your opponents, and be the last one standing in the end.

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The game's plot centers around a man named Calypso, the host of a vehicular combat tournament called Twisted Metal. He promises to grant the winner of the tournament anything he or she desires, without any limit of availability or even reality. The game's story takes place on Christmas Eve, 2005, during the 10th annual running of Twisted Metal taking place in Los Angeles.

You can remember that six months ago, somewhere between midnight and morning, your computer signaled an incoming e-mail on the United Internet System. When you saw the name of the sender, CALYPSO, your eyes glazed over with visions of your greatest fantasy, your ultimate desire. And then, when you read the message, you knew that this dream was within your grasp. The message, flashing in red, simply said: WILL YOU DRIVE?

Once a year the legendary Calypso, a man who dwells beneath the streets of LA, holds the TWISTED METAL competition. The contest takes place all around the Los Angeles area and calls upon vehicles of every kind to battle to the death. The one driver still alive at the end of the night is granted any request--any prize he asks for. There are no limits on price, size, or, according to some, even reality.

Your special invitation from Calypso has given you the chance to do battle in Twisted Metal. This is where all of your skills, all of your luck, and all of your guts, are put to the test. This is where life and death decisions occur every instant. This is where the Grim Reaper lurks around every corner, waiting to strike. And this is where your ultimate dream can come true. Welcome to the big time...WELCOME TO TWISTED METAL!

The game counts with a total of 13 vehicles, in which 12 are selectable. Each vehicle has its own set of stats, including armor/resistance, speed/handling and power, as well as a unique Special Attack.

One Player Contest allows the player to choose a vehicle and battle through the 6 arenas of the contest. If the player emerges victorious, he/she will be treated to an ending movie showing just how winning the contest works out for the character they chose. Each arena has a set amount of competitors that the player must defeat, but exactly who the player has to fight is completely random.

The first arena in the game is the arena, where the player and one opponent square off for the right to compete in Twisted Metal. After the arena, the player moves into LA's warehouse district for a battle with three different opponents. Once the player wins that battle, he/she is rushed onto the freeways, where five more opponents await. After the player secures the freeways, he/she goes to LA's river park and battles six more opponents. Should the player win the battle in the river park, he/she advances to the bloodiest battle of them all: The suburbs. Here, the player must battle eight different opponents. Should the player be lucky enough to survive this devastating battle, he/she will be pushed onto the rooftops, where only three await. After the three remaining opponents are defeated, the player stays on the rooftops to battle Minion, the winner of the previous contest. Should the player defeat Minion, he/she wins the contest and is granted an audience with Calypso, the creator of the competition, to claim the desired prize of the player's chosen character. This is shown in the form of a cinematic. However, if the player loses all three of their lives at any point during the game, the story ends prematurely. The player can return to the last point they reached by entering a code given at the end of the previous match or in the pause menu.